Massachusetts Democratic Senator Elizabeth Warren again slammed Fidelity’s decision to allow Bitcoin in retirement savings plans, particularly in light of the recent collapse of crypto exchange FTX.
Warren, along with Illinois Democratic Senator Dick Durbin and Democratic Minnesota Senator Tina Smith, raised their concerns this summer over Fidelity’s decision, announced in April, to let the 23,000 companies using its 401(k) platform allow their plan participants to allocate as much as 20% of their 401(k) savings to Bitcoin.
On Monday, the senators pointed to the collapse of FTX — which declared bankruptcy and is the target of multiple claims and investigations — as an indication of how dangerous the crypto space truly is.
“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems. The industry is full of charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors promoting financial products with little to no transparency, the senators wrote to Fidelity’s chief executive officer, Abigail Johnson.
Fidelity was at the forefront of traditional financial institutions embracing cryptocurrency: The firm started mining bitcoin in 2014 and launched its Digital Assets four years later.
This year, in addition to allowing Bitcoin in 401(k)s, Fidelity announced a new crypto-based exchange-traded fund. And earlier this month, Fidelity created a waiting list for commission-free trades in Bitcoin and Ethereum.
Fidelity has also been a supporter of ambitious but unorthodox plans at Sam Bankman-Fried’s FTX.
Fidelity Digital Assets president Tom Jessop was among many proponents writing comment letters to the Commodity Futures Trading Commission in support of FTX’s proposal to let its derivatives exchange trade directly with investors on margin generated via algorithms rather than intermediaries such as brokers, according to Bloomberg.
“We believe innovations like the proposed FTX margin model, in principle, generally help to decrease systemic risk, increase investor protection, and facilitate broader access to financial products,” Jessop wrote, but adding that several questions remained to be answered about the model, according to Bloomberg.
Other supporters of the margin model included faculty members at Georgetown and the University of Chicago, Fortress Investment Group and Susquehanna International Group, the news service wrote earlier this month.
The FTX collapse, meanwhile, continues attracting scrutiny. A Reuters report cites property records indicating that FTX, Bankman-Fried’s parents and senior FTX executives purchased a total of $121 million worth of properties in the Bahamas over the past year.
